FOR ADVISERS ONLY
Pension protection
What you will find on this page
Lifetime allowance protection
It is currently possible to protect benefits from a lifetime allowance charge as a result of the lifetime allowance being reduced (which the Government like to do quite often). This protection has the effect of locking the lifetime allowance at a certain rate, meaning the reduction won't apply. However, there are conditions which, if broken, will result in protection being lost.
Protecting pre 6 April 2006 benefits and tax-free cash
Pensions legislation changed on 6 April 2006. However, it was possible to protect existing benefits.
Protecting benefits
It was possible for members of pension schemes set up before 6 April 2006 to protect the benefits that they already had. There were 2 types of protection - primary protection and enhanced protection.
Protecting tax-free cash
Members who had a right to more than 25% tax-free cash on 6 April 2006 and who didn't opt for protection (see above) may still have their tax-free cash entitlement protected. This is called scheme specific protection.
Protecting pre 6 April 2006 pension age
Before 6 April 2006 some individuals had a right to take their pension benefits before the normal minimum pension age of 55 if they either had a protected pension age, or they were retiring due to ill-health.
Tax-free cash protection on transfer
Protecting tax-free cash on transfer is, and always has been, one of the most popular queries we receive. More specifically, what happens if a member who is entitled to tax-free cash of more than 25% is transferring to another plan?
Send us your burning questions through our ‘Ask a question’ page.
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